Inside Health

Westchester Hospital Says It Must Have Government Money to Survive

By LISA W. FODERARO

Published: March 8, 2005

Officials at the financially troubled Westchester Medical Center, who last month urged all levels of government to come to its rescue, say the 1,000-bed regional hospital will deplete its cash reserves within months.

In an interview about the hospital's fiscal woes and future prospects, the interim president and chief executive, Mary Brown, and the hospital board's chairman, Richard A. Berman, said that without continuing government support, the hospital would continue to lose money. The deficit for last year is estimated at $56 million and this year's is projected at $60 million.

''We're going to run out of cash this summer,'' said Mr. Berman, who is also president of Manhattanville College. ''Even if we were best-in-show in terms of management practices and infrastructure, this institution will not and cannot be self-sufficient.''

Hospital officials say the medical center, which like many hospitals has been hurt by slow reimbursement rates and rising costs, offers a level of care that is extremely expensive to provide. It has a burn unit, neo-natal intensive care services, an organ transplant program and a trauma center with a Medevac helicopter.

''You have to keep the helicopter ready to go whether it flies once or 15 times,'' Mr. Berman said.

As a former county hospital, Westchester Medical Center has also held on to its mission of being a safety net for the poor. The cost of treating patients almost always exceeds the insurance payments, Ms. Brown said.

''We had a burn patient who had $2 million in skin grafts,'' Ms. Brown said. ''She had no insurance and didn't qualify for Medicaid. She fell through the cracks. We swallow that cost. We have patients who stay with us for a year on a ventilator. They have no place to go.''

Last month, the hospital announced two proposals for keeping the medical center solvent and covering its capital expenses. One involves an annual infusion of $60 million, evenly split among the county, state and federal governments, as well as $20 million in annualized cost savings at the hospital and another $20 million in union concessions.

The other plan, which Gov. George E. Pataki has criticized, would require the state to extend indefinitely a quarter of 1 percent sales tax that is set to expire on May 31 and to apply the revenue, $650 million to $700 million a year, to public hospitals and nursing homes across the state. By its estimate, the medical center would stand to receive about $80 million a year.

Mr. Berman and Ms. Brown have been to Albany and Washington recently to present the hospital's case to lawmakers. While the talks are still in their early stages, elected officials indicate that they will not allow the hospital to fail.

Nicholas A. Spano, a Republican state senator from Westchester, said that since the hospital was asking for perpetual assistance rather than a one-shot bailout, the problem was trickier to address.

''It's going to be a very difficult and challenging process to make this happen, but the bottom line is that the state delegation is committed to saving the medical center,'' he said. ''The services it provides are unique. And to their credit, they are taking steps to get their own act in order, administratively.''

Congresswoman Nita M. Lowey, a Democrat, agreed. ''Regardless of how we got to this point, the medical center cannot close,'' she said. ''We have to find solutions, and it isn't just Westchester's problem because 40 percent of the patients live outside of Westchester'' in the seven-county region.

Westchester County continues to guarantee a large portion of the hospital's debt. Larry S. Schwartz, the deputy county executive who joined hospital officials in Washington and Albany, said he favored the sales-tax plan. ''It is the least painful solution, the easiest solution,'' he said. ''It's a way to not only help the medical center, but other financially distressed hospitals and nursing homes.''

The unions also prefer that plan, which does not entail workers' concessions. But Ms. Brown said the administration was frustrated by what she called the ''cumbersome'' work rules and ''above market'' benefits of the Civil Service Employees Association, the union representing 1,600 workers there.

Without concessions, hospital officials said, they would consider asking the State Legislature to change the center's designation to a nonprofit hospital under section 501(c)(3) of the federal tax code, exempting it from Civil Service requirements.

Jessica Stone, a spokeswoman, said the union would fight any effort to it ''every step of the way.'' In selling their plans, hospital officials have tried to highlight the economic importance of the hospital to the region. With 3,300 employees and another 800 attending physicians on staff, the hospital contributes $1.1 billion a year to the state economy.

When the hospital spun off from county government in 1998 as a public benefit corporation, expectations were high that it could compete in the changing health-care marketplace. But the hospital, in Valhalla, soon stumbled, recording mounting deficits -- $83 million in 2003 alone -- and carrying out rounds of layoffs. Unlike many big teaching hospitals, the center had no endowment to fall back on.

As the situation worsened, the hospital brought in an outside consulting firm, Pitts Management Associates of Baton Rouge, La., including Ms. Brown. Last year, she seemed upbeat when she announced a 100-point plan to bring the hospital to break-even status by 2006.

At the time, Ms. Brown lowered the projected 2004 deficit to $31 million, a significant improvement over the year before. But she later revised it upward. ''I kept getting surprises, and surprises are never good,'' she said, referring to a sudden jump in the use of health benefits among hospital employees and a decision by accountants to write off $8 million owed to the hospital.

Ms. Brown also discovered that the hospital had what she described as a stone-age accounting system, and billing, bookkeeping and payroll departments all in need of updating. The hospital has begun to install computer software and train workers to identify every billable service and collect every penny owed. She said she was confident the improvements would ease the annual deficits but not erase them.

Mr. Berman said the medical center would continue to lose an estimated $3 million to $4 million a month, even with the best practices in place.

One reason the large New York City hospitals were not having as many problems as Westchester, he said, was their large patient volume and case mix, and their use of routine and better-paying procedures rather than more complex ones. As an advanced-care hospital serving a 5,000-square-mile area dotted with community hospitals, the medical center gets the sickest of the sick. ''We don't do any routine orthopedics or routine OB-GYN,'' he said.

Photo: Connor Healey, a patient at Westchester Medical Center in Valhalla, being treated for burns on his legs. (Photo by G. Paul Burnett/The New York Times)